2007 (6) TMI 550 - HC - Income Tax

Assessee's Tax Relief: High Court Emphasizes Double Taxation Agreement Criteria

The High Court of Gujarat considered the entitlement of the assessee to relief under the double taxation avoidance agreement. Emphasizing the distinction ... - Issues involved: Interpretation of relief under the agreement for avoidance of double taxation of income u/s Income Tax Act, 1961.Summary:The High Court of Gujarat was presented with a question regarding the entitlement of the assessee to relief under the agreement for the avoidance of double taxation of income. The Court referred to a previous decision and emphasized that liability to tax is a legal situation, distinct from the actual payment of tax. The Court highlighted the importance of the Model Tax Convention of 1992 and the conditions for claiming relief under the agreement. It was noted that the assessee must demonstrate liability to tax in the foreign country with which the agreement was made, rather than proof of actual tax payment. The Court directed that the provisions of the foreign country's tax statute should be presented, and both parties should have the opportunity to provide evidence. The Court declined to answer the questions referred, instructing the Tribunal to decide the issue based on the additional evidence to be presented by the parties. The matter was remanded to the authorities to reevaluate the facts in light of the Court's discussion in a previous case and determine whether the benefit of the agreement for avoiding double taxation could be granted to the assessee.